Thoughts, links, inside information and program previews from the host of Chicagoland's premier local-access political talk show.

Wednesday, December 08, 2004

Updated December 8 at 10:55 pm
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Berkowitz takes on Neil Steinberg and Eric Zorn: The real reason why there is immigration, legal and illegal- the gap that really matters.
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Eric Zorn responds to my inquiry [See my blog entry immediately below] as to what he means when he asserts (1)immigrants to the United States are not “do[ing] the scutwork that Americans can't bring themselves to do," as Neil Steinberg claims and (2) the situation is not reflective of a “labor shortage, but of a wage gap.

Zorn states, in two separate emails, reported below:

(1) “The wage gap is the gap between that which is being paid and that which Americans feel they need to be paid to do that kind of work. Your beloved market forces would, absent immigrant labor, raise the wages on, say, field work, until it was high enough to lure native workers to pick the crops. It's not the WORK that Americans object to in low paying jobs, it's the PAY. That's all.” and

(2) “If you assume a genuine labor shortage, then yes. If the statement is "We need immigrant labor to do jobs we do not have the population of able-bodied workers to fill," then fine. But I don't think that, demographically, that's the case.”

But, Zorn’s language continues to confuse the situation. I suppose his point to Steinberg is simply that we don’t “need,” the immigrants because the employees to do the work are in the U. S. It is just that those employees are not willing to do the work [e.g., pick crops] at the wages that employers want to pay. In Zorn’s lingo, there is no “shortage” of laborers. Just a “wage gap.” But, speaking in that way only confuses the situation.

In the lingo of economics, the decision by the U. S. not to enforce its borders against illegal immigrants has resulted in a large influx of new labor to the U. S. market. In the words of economists, that is equivalent to a shift of the supply curve of unskilled labor in the U. S. to the right, both increasing the equilibrium quantity of such labor supplied and demanded and lowering the market clearing wage [assuming the demand curve for such labor does not shift] for both the illegal immigrants and the “native” unskilled workers.

A great many “native workers,” choose to remain unemployed—exercising their option to collect welfare and/or continue their search for higher paying jobs [with more desirable non-pecuniary features]. This last sentence is Steinberg’s point. I suppose it is Zorn’s point, too, with Zorn asserting, correctly, that a higher price [or the absence of a welfare option] would cause the native laborers to choose to do the work. But, at the end of the day, they would only choose to do some of the work currently being done by immigrants and producers would choose to hire fewer laborers, substituting, to some extent, capital for labor, as the price of labor increased.

Moreover, Zorn’s wage gap, and his way of looking at things, tends to distort the analysis. The most relevant gap here is the difference in wages in the U. S. and Mexico [or other countries from which the illegal immigrants come] for non-skilled labor. Of course, the wage is lower in Mexico, so that “gap,” results in the illegal immigrants essentially arbitraging the two markets by migrating across the border to better opportunities in the U. S.

But, Zorn is mistaken when he asserts that the absence of immigrant labor would “raise the wages on, say, field work, until it was high enough to lure native workers to pick the crops.” His way of looking at things leads him to imply all would be the same without immigration- just higher wages in the U. S. if the immigrants were kept out. In fact, wages would be higher, but not as many crops would be picked, and the technology used would be somewhat different- reflecting adjustments by employers to the higher price of labor relative to capital. [Preventing immigration has the effect of shifting the supply curve for non-skilled labor back to the left].

Moreover, with my way of analyzing the situation, the way of economics, we see the relevant “gap” and it is a gap that means, with immigration permitted, resources will gravitate, as they do in any free market, toward their highest valued use [as Judge Posner likes to put it]. With Zorn’s and Steinberg’s way of looking at the world, which is more of a static approach, we tend not to see what is really going on with respect to immigration.

Steinberg and Zorn's analysis implicitly portrays immigration occurring either because Americans don’t “like to do scutwork.,” or because there is a “wage gap” in the U. S. With my way of looking at things- the way of economics- we see resources, unskilled labor, moving to a higher valued use—a win, win situation, not unlike the wave of migration of unskilled labor from the south to the north that happened many years ago within the U. S.

Words matter, but not necessarily in the way that Steinberg and Zorn would suggest. And, I might be one of the few journalists who could bring Steinberg and Zorn together.
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Jeff Berkowitz, Host and Producer of Public Affairs and an Executive Recruiter doing Legal Search, can be reached at JBCG@aol.com
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